Magic Realm, Incorporated, has developed a new fantasy board game. The company sold 26,400 games last year at a selling price of $64 per game. Fixed expenses associated with the game total $440,000 per year, and varlable expenses are $44 per game. Production of the game isentrusted to a printing contractor. Varlable expenses consist mostly of payments to this contractor. Required: 1-a. Prepare a contributlon format Income statement for the game last year. 1-b. Compute the degree of operating leverage. 2. Management is confident that the company can sell 33,792 games next year (an increase of 7,392 games, or 28%, over last year). Glven this assumption: a. What is the expected percentage Increase In net operating Income for next year? b. What is the expected amount of net operating Income for next year? (Do not prepare an income statement; use the degree of operating leverage to compute your answer.) Complete this question by entering your answers in the tabs below. Req 1A Req 18 Req 2 Management is confident that the company can sell 33,792 games next year (an increase of 7,392 games, or 28%, over last year). Given this assumption: a. What is the expected percentage increase in net operating income for next year? b. What is the expected amount of net operating income for next year? (Do not prepare an income statement; use the degree of operating leverage to compute your answer.) Show less A a. Net operating income increases by h Total evrerted net onerating income
Magic Realm, Incorporated, has developed a new fantasy board game. The company sold 26,400 games last year at a selling price of $64 per game. Fixed expenses associated with the game total $440,000 per year, and varlable expenses are $44 per game. Production of the game isentrusted to a printing contractor. Varlable expenses consist mostly of payments to this contractor. Required: 1-a. Prepare a contributlon format Income statement for the game last year. 1-b. Compute the degree of operating leverage. 2. Management is confident that the company can sell 33,792 games next year (an increase of 7,392 games, or 28%, over last year). Glven this assumption: a. What is the expected percentage Increase In net operating Income for next year? b. What is the expected amount of net operating Income for next year? (Do not prepare an income statement; use the degree of operating leverage to compute your answer.) Complete this question by entering your answers in the tabs below. Req 1A Req 18 Req 2 Management is confident that the company can sell 33,792 games next year (an increase of 7,392 games, or 28%, over last year). Given this assumption: a. What is the expected percentage increase in net operating income for next year? b. What is the expected amount of net operating income for next year? (Do not prepare an income statement; use the degree of operating leverage to compute your answer.) Show less A a. Net operating income increases by h Total evrerted net onerating income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Magic Realm, Incorporated, has developed a new fantasy board game. The company sold 26,400 games last year at a selling
price of $64 per game. Fixed expenses associated with the game total $440,000 per year, and varlable expenses are $44 per
game. Production of the game is entrusted to a printing contractor. Varlable expenses consist mostly of payments to this
contractor.
Required:
1-a. Prepare a contribution format Income statement for the game last year.
1-b. Compute the degree of operating leverage.
2. Management is confident that the company can sell 33,792 games next year (an Increase of 7,392 games, or 28%, over last
year). Given this assumption:
a. What is the expected percentage Increase In net operating Income for next year?
b. What Is the expected amount of net operating Income for next year? (Do not prepare an Income statement; use the degree
of operating leverage to compute your answer.)
Complete this question by entering your answers in the tabs below.
Req 1A
Req 1B
Req 2
Management is confident that the company can sell 33,792 games next year (an increase of 7,392 games, or 28%, over last
year). Given this assumption:
a. What is the expected percentage increase in net operating income for next year?
b. What is the expected amount of net operating income for next year? (Do not prepare an income statement; use the degree
of operating leverage to compute your answer.)
Show less A
a. Net operating income increases by
b. Total expected net operating income
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